The Relationship between Diversification Strategy and Cost of Capital

  • 丁 紅寧

Student thesis: Master's Thesis

Abstract

The main purpose of this study is to explore the relationship between diversification strategy and the cost of capital and provide Taiwanese companies with advices while doing the diversification decision making We obtain data from Taiwan Economic Journal (TEJ) database during the period of 2004 to 2013 The total sample is 4 048 firm-year observations We employ multivariate regression analysis to analyze the degree of diversification strategy’s impact on cost of equity capital cost of debt capital and the weighted average cost of capital The results show that the degree of diversification cannot affect corporate cost of capital implying that stakeholders are not convinced by the risk reduction through firms’ diversification strategies
Date of Award2015 Jul 16
Original languageEnglish
SupervisorHsuan-Chu Lin (Supervisor)

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